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WINNIPEG - Manitobans will pay more for gas, cigarettes and spa treatments as the NDP government struggles to slay a $1-billion deficit by hiking taxes and user fees.

In its budget tabled Tuesday, the province is boosting fees for land titles, birth, marriage and death certificates to bring in an extra $7 million.

Gas taxes are going up 2.5 cents a litre while smokers will pay 63 cents more per pack. Money raised through the gas tax, which has been frozen for almost two decades, will go directly to fixing the province's roads and bridges.

The NDP is also expanding the seven per cent provincial sales tax to include some forms of insurance and cosmetic services such as pedicures, manicures, haircuts, tattoos and piercings.

The province is also pledging to loosen its strict 12 p.m. to 6 p.m. Sunday shopping hours — the most stringent in the country, according to the government. The plan is to start consultations with the aim of having new hours in place by Boxing Day.

Hidden in budget papers, the government said it is hoping to raise $75 million through the unspecified sale of provincial assets, which could include some government buildings.

"These are uncertain times," said Finance Minister Stan Struthers. "The effects of last year's flood are still being felt. There is upheaval in the global economy and the federal government has made our work harder by freezing transfers and cutting jobs here in Manitoba."

"They're increasing the cost of gasoline, which has already gone up by more than 10 per cent in the first few months of the year," he said. "Hydro rates are going up greater than the rate of inflation. This is a government that has an out-of-control spending problem and Manitoba families are now being asked to pay for that."

The government will take $56 million out of its rainy-day fund but will still run a projected deficit of $460 million in 2012-13. Despite modest projected revenue growth, Struthers is forecasting the province will go from its $1-billion deficit this current fiscal year to a $23-million surplus in 2014 as it promised in last fall's election.

"We will meet this target and we will do so without reckless cuts to core services."

The province is trying to rein in spending by merging 11 regional health authorities into five, which Struthers said will eliminate about 35 executive positions. Manitoba is also freezing or cutting the budgets in 10 of its smaller departments such as Aboriginal Affairs, Conservation and Family Services.

Manitoba will also merge the liquor commission with the lotteries corporation as it reduces government agencies. Struthers said the NDP will slice the cost of government by cutting travel costs, deferring wage increases and slashing office expenses for legislative assembly members.

"These are bold, responsible and modern ways to reduce the cost of government," Struthers said. "Manitobans need to know that we're getting our own house in order at the same time as we understand what we're up against."

While some called for the government to play hardball with public-sector unions and conduct a thorough review of provincial programs, Struthers said the NDP is determined to bring the province back into the black through a delicate balance of administrative cuts and strategic spending increases.

It wasn't enough for many who were looking for increased spending on everything from city roads to social programs. Doug Dobrowolski, president of the Association of Manitoba Municipalities, said the cash raised from the increased gas tax will go to boost provincial infrastructure but will do little help the province's municipalities.

"We're very disappointed that there wasn't a significant increase in infrastructure investment in this province," he said.

Social activists weren't happy either. Brendan Reimer, with the Canadian Community Economic Development Network, said the NDP should be spending more to address social problems rather than boosting spending on crime.

"Dealing with the cost of health care, dealing with the cost of crime later, is much more expensive than investing in prevention at the front-end," he said.

Expanding Sunday shopping hours also got mixed reviews. The government argues it will boost the economy by helping businesses compete against the growing popularity of online shopping and changes to cross-border shopping restrictions.

"The times are changing," Struthers said.

The move was hailed by those in the business community who have long been calling for expanded shopping hours. While Winnipeg's chamber of commerce criticized the government for not attacking the deficit more aggressively, chair Brian Bowman said he's glad the province seems to recognize businesses should have the freedom to decide their own Sunday hours.

"They're going to know their customers better than government," he said.

But Kevin Rebeck, president of the Manitoba Federation of Labour, said he was disappointed the province felt the need to tinker with Sunday shopping.

"I thought we had a good compromise," Rebeck said. "There is Sunday shopping now and there is some work-life balance. I'm concerned with what this means."

Liberal Leader Jon Gerrard called the budget a "facade of action."

"It papers over the fact that there is a growing and worsening fiscal deficit — the largest in the history of our province — and there is a growing and worsening social deficit," he said.

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